ARM, Imagination divvy up MIPS

NEW YORK -- MIPS Technologies, which had been on the block for almost a year, finally found buyers in a complicated deal involving Imagination Technologies and ARM.

Imagination said Tuesday (Nov. 6) it has agreed to buy MIPS' operating business for $60 million. Under terms of the deal, the U.K. graphics IP vendor will gain 160 engineers and 82 MIPS patents.

The move is viewed as a way for Imagination to beef up its CPU core expertise while defending its graphics lead. It would also position Imagination to competing against ARM, which has been pursuing its integrated CPU-GPU solution strategy.

Separately, ARM said it will lead a consortium buying the rights to the MIPS portfolio of 498 patents. The consortium, called Bridge Crossing LLC, will pay $350 million in cash to purchase the rights to the portfolio, of which ARM will contribute $167.5 million.

Bridge Crossing is an acquisition vehicle for Allied Security Trust (AST), a consortium of companies with a history of buying up patents. The consortium often sells off or licenses those patents. Consortium members include Avaya, HP, IBM, Intel, Motorola, Oracle, Philips, Research in Motion and others.

J. Scott Gardner, a senior analyst at The Linley Group, said “ARM purchased rights to all of the MIPS patents, so they have legal peace.” What remains unclear, however, is whether companies such as Qualcomm, Broadcom and Apple will have to purchase their own licenses for access to the AST portfolio, Gardner added. “As I understand it, the entire purpose of AST is to keep patents from falling into the hands of trolls. I assume that these other companies are part of the AST group and are also safe," he said.

Asked during a conference call, which companies belong to AST and who have access to the MIPS portfolio of 498 patents, Imagination and MIPS executives declined to provide names.

Imagination CEO Hossein Yassaie did say 82 of the patents acquired in the deal cover key aspects of the MIPS architecture. That will help Imagination to move MIPS architecture "go forward," he noted, while protecting royalties coming from current and future MIPS licensees. Once the Imagination-MIPS deal is completed, MIPS royalties will go to Imagination, not to AST, Yassaie said.

According to Imagination, that is NOT the case. I will be posting a follow-up anaysis piece shortly. But in a nut shell, Imagination CEO made it very clear during the conference call that his company will move the MIPS architecture "go forward."

Clearly the merger gives ARM a little more competition as the game increasingly shifts to supplying a full suite of SoC blocks.
Imagination will gain leverage selling graphics and other cores into set-tops where MIPS is strong and Imagination could help MIPS gain more traction in mobile.